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CIRCULAR No.115/1999/TT-BTC OF SEPTEMBER 24, 1999 GUIDING THE GOVERNMENT BONDS PURCHASE AND SALE BETWEEN ELIGIBLE ORGANIZATIONS AND ORGANIZATIONS AS WELL AS INDIVIDUALS

Pursuant to Ordinance No. 12/1999/UBTVQH10 of April 27, 1999 on the issuance of Government bonds for national construction;

Pursuant to Decree No. 34/1999/ND-CP of May 12, 1999 of the Government stipulating the issuance of Government bonds for national construction in 1999;

Pursuant to Enterprise Income Tax Law No. 03/1997/QH9 of May 10, 1997;

In order to facilitate the purchase and sale of Government bonds between Government bonds-trading organizations and other organizations as well as individuals, ensuring the legitimate rights and interests of involved parties, particularly the bonds� owners, the Ministry of Finance hereby guides in detail as follows:

I. GENERAL PROVISIONS

1. This Circular guides the government bonds trading by organizations which are licensed to trade in Government bonds.

The organizations which have no function to trade in the Government bonds shall not be entitled to take part in any form of bonds trading. For their own bonds directly bought at the State Treasury in the issuance period, they may sell such bonds when they so need.

2. Organizations entitled to trade in Government bonds as stipulated in this Circular include:

- Credit institutions being Vietnamese legal entities and operating under the Law on Credit Institutions;

- Vietnamese securities companies established under the provisions of law.

3. The Government bonds-trading organizations shall have to monitor and make separate accounting of their bonds-trading activities and have the obligations to pay tax to the State budget according to the provision of this Circular.

4. The Government bonds-trading organizations shall be subject to the supervision and inspection by financial offices and agencies performing specialized State management over the Government bonds trading activities as prescribed by law.

II. SPECIFIC PROVISIONS

1. The organizations which are entitled to trade in Government bonds when carrying out their trading activities, shall not have to carry out the procedures applying for permission of the State management agencies.

2. In the course of bonds trading, the Government bonds-trading organizations shall have to publicly announce the selling and buying prices of bonds and conduct the sale and purchase right at the announced price.

For bonds which have been bought for less than 12 months as from the issuance date written thereon, the minimum buying price must not be lower than 90% of such bonds� denomination.

For bonds which have been bought for more than 12 months as from the issuance date written thereon, the buying price shall be determined on the basis of their denomination and the interest thereon by the time of bond purchase, which must be higher than such bonds� denomination.

3. The Government bonds-trading organizations shall have to open accounting book to monitor and make separate accounting of the bonds trading activities.

4. The Government bonds-trading organizations have the obligation to pay income tax as prescribed by the Law on Enterprise Income Tax and other current legal documents. The taxable income shall be determined as follows:

a) For the income earned from the Government bonds sale and purchase, taxable income (if any) shall be determined as follows:

Taxable Bonds Bonds Reasonable

income = sale - purchase - expenses

amount amount

b) For the income earned from the Government bonds which have been bought and directly repaid by the State Treasury when they become mature (after 5 years) or repaid ahead of time, the taxable income (if any) must be paid. Taxable income shall be determined as follows:

Taxable Repaid amount Amount used

income = (principal - for buying - Reasonable expenses

and interest) such bonds

5. For the Government bonds which have been bought before the effective date of this Circular, when selling such bonds, the Government bonds-trading organizations shall have to declare and pay enterprise income tax (if any) as prescribed and the buying price of Government bonds to determine income tax shall be the actual buying price.

6. To prohibit organizations and individuals to speculate Government bonds for trading, thus causing market disorder and false impact on the rising and fall of bonds selling and buying price.

7. When government bonds-trading organizations buy bonds at the price lower than the minimum price stipulated at Point 2, Section II of this Circular, the deference amount must be retroactively collected and remitted to the State budget. In case of recidivism, such Government bonds trading organizations shall be suspended indefinitely from bonds-trading activities.

III. IMPLEMENTATION PROVISIONS

1. This Circular takes effect after it signing. The Government bonds bought by Government bonds-trading organizations at the State Treasury for the first time are not subject to the regulation of this Circular.

2. The credit institutions engaged in bonds-trading activities shall have to strictly comply with the provisions of this Circular and relevant guiding documents of the Vietnam State Bank.

3. In the course of implementation, if meeting with difficulties, organizations and individuals are requested to report them promptly to the Ministry of Finance for study and settlement.

For the Minister of Finance

Vice-Minister

PHAM VAN TRONG